Bucket Book – The Intelligent Investor

My first interest in the stock market began when I was six. That’s right – six. I remember being at my grandparents house. We ate dinner after the Huntley-Brinkley Report, which always included a brief statement about three Dow-Jones indices: the Industrials, the Utilities, and the Rails (known today as the Transportation Index). I can’t remember a specific conversation, but I do remember knowing that a portion of my grandfather’s retirement was in a stock called Standard Oil of New Jersey (now Exxon). It was better for his stock to be up than it was for it to be down.

When I was in junior and senior high school, my father worked for Xerox. At the time Xerox was one of the Nifty Fifty – the darling stocks of Wall Street – and from conversations between my parents, I learned that owning stock in a company means you owned portion of the company; stock prices often split after it went up for a long period of time; stocks paid and increased their dividends. I also learned that most of the products we used around the house were made by companies whose stock could be purchased. My grandmother’s Joy dishwashing liquid was made by Proctor and Gamble, as was my Crest toothpaste. Holley carburetors (I was a muscle car enthusiast) were made by Colt Industries. I was intrigued and continued to pay attention to the stock market report on the evening news. Occasionally I’d look at a discarded copy of the Wall Street Journal to pick up information on other companies associated with products we used every day.

By the time Cherry and I were married and I entered seminary, we had scraped together $500. It was hard to sell my new bride on the idea, but we eventually invested in the 18 shares of Squibb Corporation. Somewhere along this journey, I learned of Benjamin Graham’s classic work, The Intelligent Investor. My wife’s skeptical attitude about buying a stock at our age and with our limited resources convinced me that if I was going to be an investor, I had better be intelligent about it. So I checked the book out of the public library and read it.

I learned about PE ratios, margins of safety, and book value. In a day that was not only pre-internet, but pre-calculator, Graham’s book taught me formulas I used to performed my own manual calculations on companies that were candidates for investment. I spent many Mondays in the Louisville Public Library reading S&P stock summaries and performing calculations from Graham’s book.

Across the years I’ve tried to participate in saving for my daughters’ college educations an in my retirement planning. Thanks to Excel and a thousand websites, I don’t have to crunch numbers with a pencil and paper. Neither do I stick to strict Graham formulas when considering and investment. But The Intelligent Investor taught me what to look for, how to make reasoned decisions about a stock, and what data really matters.

My interest in economics and markets has never abated. The Intelligent Investor provided a key piece of my informal education in these areas.